What's in a name? Sony finds it costs them lots

BRUSSELS, Belgium (AP) _ Is Sony's new PlayStation 2 a video game player or a computer? It's more than just a marketing question: The answer is costing the Japanese electronics maker millions in

Wednesday, November 22nd 2000, 12:00 am

By: News On 6

BRUSSELS, Belgium (AP) _ Is Sony's new PlayStation 2 a video game player or a computer? It's more than just a marketing question: The answer is costing the Japanese electronics maker millions in import taxes ahead of this week's European launch.

The hot new consoles hit the shelves across Europe on Friday after setting off a scramble among early Christmas shoppers in the United States last month.

Equipped with a 128-bit microprocessor, a DVD player and an ability to connect to the Internet, Sony believes the new units have grown up enough from the first PlayStations to qualify as a computer.

But the customs office in Britain, where Sony Computer Entertainment Europe is based, rejected that argument and put the PlayStation 2 in the same video games category as the originals.

That means each unit is subject to a duty of 2.2 percent, or roughly dlrs 9, when imported for sale in the European Union. Products classified as ``digital processing units'' _ i.e. computers _ don't have to pay any import tax.

Sony spokeswoman Liz Ashford said Wednesday that Sony is appealing the decision in London by asking for a departmental review. If that fails, legal action could follow.

EU Commission spokesman Jonathan Todd said the EU established the rules for ``computers used basically for games'' earlier this year when confronted with Sony rival Sega's similarly souped-up Dreamcast console.

The Playstation 2 decision ``is in line with the Commission's classification rules,'' he said, adding that Sony was free to challenge the ruling in court.

In the meantime, Sony is absorbing the cost of the tariffs rather than passing it on to European consumers, who already will pay a hefty premium over U.S. video game addicts.

``It won't change the date of the launch or the cost,'' she said by telephone from London.

The same PlayStation 2 that retails for dlrs 299 in the United States is priced at 299 pounds (dlrs 425) in Britain, 2990 francs (dlrs 385) in France and 869 marks (dlrs 375) in Germany.

Sony is still facing supply shortages that made the PlayStation 2 scarce at its U.S. debut a month ago, but Ashford said Sony has not changed its forecast of selling 3 million units in Europe by the end of the company's fiscal year in March.